Human resource management
Human resource management
PESTEL Analysis of Indonesia. 6
Hofstede Analysis of Indonesia. 10
Hofsted Analysis of the United Kingdom.. 11
Hofsted Analysis of Netherlands. 11
Human Resource Management Practices. 13
Factors influencing Recruitment 13
Carrying out various tests for recruitments. 16
Reasons for Training and Development 17
Characteristics of reward management System.. 19
Objectives of Reward management 20
Rewards by Team, Individual or Organization. 20
Executive Summary
Human Resource is a very vital asset in any given organization. This is simply defined as group of the personnel who form the staff of an institution, business or company. Human Resource can also be termed as Human Capital. This defines it as the skills and knowledge possessed by an individual or individuals in an organization. The human resource department of any entity is therefore responsible for welfare of all employees of that organization. Some the activities of this department includes, conducting and supervising staffing and recruitment, documentation of staff members, supervising of employee benefits and compensations, learning and training, ensuring conformity to work and labor rules and regulations among others. This is therefore referred to as Human Resource Management (HRM).
Introduction
This report is aimed at establishing the establishing the economic drivers in the international business environment that influence human resource management strategies, effectiveness of human resource strategies in achieving employee flexibility, commitment, quality and strategic integration. The study seeks to analyze various approaches to Human Resource Management globally. Human Resource Management involves certain practices. These practices include recruitment and selection, training and development, reward management among other duties. This report therefore intends to expound more on these practices in relation to a selected case study.
Company Profile
Unilever Indonesia
Unilever is a British-Dutch multinational company that specializes in production of a variety of consumer goods. Unilever was established in 1929 by a merger between Margarine Unie and Lever Brothers. It is one of the oldest innovators having been in the game for over 120 years. Unilever has its headquarters in London and Rotterdam, in The United Kingdom and The Netherlands respectively. Unilever has specialized in three major products which include food and refreshment, home care products and beauty and personal care products. It has over 400 brands concentrated on health and wellness which are consumed by around 2.5 billion people per day. Unilever operates in 190 countries globally and has about 150000 employees all over the world. These large masses of employees worldwide require high level of Human Resource Management to help the company achieve its objectives and maintain its position as the top multinational companies.
PT Unilever Indonesia (ULI)
Unilever Indonesia was established in 1933 and has its headquarters at Bumi Serpong Damai City (DSM City). It has since emerged as one of the top Fast Moving Consumer Goods Companies in Indonesia. The company has employed over 6000 staff across Indonesia. Unilever Indonesia has majored in manufacturing, marketing and distribution of consumer goods. The main products include margarine, soy sauce, soaps, detergents, ice cream, savory, tea based beverages and fruit juice and cosmetic products
Industry Drivers
Indonesia
The Republic of Indonesia lies in South-east Asia and Oceania, between Pacific and Indian Oceans. It is therefore one of the largest island countries in the world. Indonesia is an archipelago that has a population of 267 million people and is ranked as the 4th most populated country in the world and the country with most Muslim population worldwide. This provides a good market for Unilever Products. Indonesia generally enjoys political stability, hence a welcoming factor for investors. The world’s most populated island, Java, is also found in Indonesia.
PESTEL Analysis of Indonesia
Political Factors
Indonesia is being democratic and constitutional country is headed by a president who is the commander in Chief of the armed forces. Indonesia enjoys political stability and is in good relations with its bordering countries. This state of peace attracts investors. Indonesia is also a member of several world organizations such as; The United Nations (UN), Organization of Islamic Cooperation (OIC) and the World Trade Organization (WTO). It is also one of the pioneers of the Association of Southeast Asian Nations (ASEAN) and the East Asia Summit (Armstrong, 2010). This makes it efficient for international trade and investments. This factor has enhanced smooth operations for PT Unilever Indonesia in its operations and other companies.
Economic Factors
According to the research, Indonesia’s economy has grown immensely in the last two decades, and is currently ranked as the 16thlargest economy worldwide. The economy is dominated by foreign investors and private companies. However, the government also owns quite a number of businesses. The country’s biggest industries include agriculture, oil and gas, hospitality, hydrocarbons, automotive and mining. Corporate tax is 25%, residents from 5% to 30% tax depending on their income and Non-residents a flat rate of 20% tax (Hamid, Said & Meiria, 2019). The country is rich in minerals hence presence of various industries. It has oil and natural gas and is ranked 8th in gas exportation globally. These conditions have attracted both local and international investors.
Social Factors
Indonesia has a population of about 271,936,596 people and is still steadily increasing at a rate of 2.23%. This high population provides a ready market for fast moving consumer goods among other products. The life expectantly is averagely 70 years. Indonesia is the largest Muslim country in the world with almost 90% being Muslims and roughly 10% Christians. Despite this dig difference, the entire population enjoys religious freedom and a diverse ethnical background. The country has a literacy rate of about 95% with a rapidly growing middle class thus a notably changing customer buying behavior and patterns (Hamid, Said & Meiria, 2019). The government’s expenditure is majored on education and healthcare systems. However, Indonesia experiences some massive social evils such as human rights violations, corruption and nepotism, high rate of smoking, malnutrition and poverty.
Technological Factors
The main medium of mass communication in Indonesia is television. Online platforms are however also greatly used. Indonesia has made some good progress in the adoption of technology over the years. Technology has been used to foster growth and increase industrial capacity in electronics, automotive, textile, chemicals, food and beverage. Indonesia is aiming to be a top notch in technology in the following areas; 3D printing, robot and sensor technology, Internet, artificial intelligence and human-machine interface (Hamid, Said & Meiria, 2019). Development of E-business is also one of the factors that make Indonesia attractive to investors. The country has developed transport infrastructure with about 139 airports, railways and waterways connecting the islands and several ports, big and small.
Environmental Factors
Being located in thousands of islands, Indonesia is a tourism hub for both domestic and international tourists. However, it also experiences natural disasters such as tsunamis and earthquakes which results to loss of lives and destruction of properties. Other environmental challenges affecting Indonesia are deforestation, rapid urbanization, over-exploitation of marine resources, air pollution, traffic congestion, and water pollution. Indonesia has a number of active volcanoes which erupt now and then causing natural disasters. The last volcanic eruption was witnessed in 2004
Legal Factors
The country has laws protecting employment rights. Companies must provide special notice to concerns such as leaves, working hours, religious holiday allowance, payment for over-time work, and social security. Opening a business by a foreign business is a time-consuming and complex. There also exists environmental laws and municipal noise reduction plans.
Why Invest in Indonesia?
Indonesia provides conditions that enables eases establishment of business by both local and international investors. It is ranked at position 91 country where it is easy doing business. Some of factors that facilitate this include easier access to electricity, easy registering of a company, and easy acquiring of contracts among others. In terms of business ownership, more business classifications are opening up to foreign investments and ownership can range from 0% to 100% ownership depending on the business classification and the negative business list. The government has come up with laws where foreigners now have the right to own land in Indonesia for three main purposes mainly to use, to build or to cultivate. Indonesia has one of the fastest growing middle-class economies in the world (Armstrong, Brown & Reilly, 2010). The middle class in Indonesia is growing fast hence a valuable target group for investors. Being the 4th most populated country in the world; the large population is a lucrative market for various goods and products. This high population is still on an increase with most people moving to urban areas. The high level of urbanization being experienced is also an added investment opportunity. Indonesia has the biggest economy in Southeast Asia, with a continuous GDP growth. Penetration into Indonesia’s markets is very complicated and difficult. This is due to several entry barriers in place. This means that those companies which have managed to get into this market enjoys an advantage of low competition.
Hofstede Analysis of Indonesia, UK And Netherlands as the Host and Parent Countries of Unilever Respectively
Hofstede analysis is a framework that explains the various cultures across countries and how business is conducted across these different cultures. This model is based on the following 6 aspects; Power Distance Index, Uncertainty Avoidance Index, Short-Term vs. Long-Term Orientation, Collectivism vs. Individualism, Restraint vs. Indulgence and Femininity vs. Masculinity
Hofstede Analysis of Indonesia
Indonesia has a high-power distance index characterized by hierarchy, unequal rights between power holders and non-power holders, superiors in-accessible, leaders are directive, management controls and delegates. Decisions are centralizing and employees are expected to have respect for the authority and follow set rules and guidelines. Indonesia is generally a collectivity society with a high preference for a strongly defined social framework whereby individuals are expected to conform to the ideals of the society and the in-groups to which they belong (Bagga & Srivastava, 2014). This is evident for the example in Family matters where if one wants to marry, the he or she has to know the background of the spouse to be.
Indonesia is considered a low masculine society. Here, status and visible symbols of success are important but it is not always material gain that brings motivation but the outward appearance. People aim at displaying an impressive outward experience
There is low uncertainty avoidance index. This implies that it is very important in Indonesia to maintain work place and relationship harmony, and no one wishes to be the transmitter of bad or negative news or feedback (Bagga & Srivastava, 2014). Conflict resolution is mainly through intermediary means thus avoidance of direct confrontations. Long term orientation culture is highly witnessed in Indonesia. This means that the people easily embrace and adapt change. Hence the will to save, invest and persevere for the purpose of achieving positive results. Indonesia portrays a culture of restraint. This means that needs and activities are regulated by social norms.
Hofsted Analysis of the United Kingdom
United Kingdom has a low Power Distance culture. This means that people have high values for equality hence believe that efforts should be made to minimize inequality. UK has a high individualism culture. It therefore means that individuals are more concerned with personal developments and achievements. In most cases, there is hostility to those outside the group, and this attitude affects hiring practices and promotion decisions in a work setting. The people show high levels of individualism and privacy. As per Hofstede analysis, United Kingdom is highly masculine Country. Here, people highly value their careers and openly and easily express their objectives. The society values competition, achievement and success and more than traits such as getting on well with others, being modest, and measures such as quality of life. The society is highly success driven.
Low uncertainty avoidance is experienced in the United Kingdom. People are comfortable with uncertainty and can tolerate a lack of information about the future occurrences. They are likely to engage in high risks for a higher potential future benefit. UK’s society embraces high indulgence culture (Saeed & Asghar, 2012). The people here value leisure free time. They are open to flexible working hours and are optimistic. In the aspect of long-term orientation vs. short term orientation, the UK has shown aa level of neutrality.
Hofsted Analysis of Netherlands
In terms of power distance index, Netherlands society has a low power index. This is therefore characterized by high level of independence, hierarchy for convenience only, equal rights, superiors accessible, coaching leader, management facilitates and empowers. There is high decentralization of power and employers rely on the experience of their staff. In than connection, employees anticipate consultation and not command from their superiors (Zumbansen, 2012). Netherlands has come out as an individualist country. Individuals here are expected to be responsible for themselves and their immediate families only. Employer/employee relationship is a contract based on mutual advantage, hiring and promotion decisions are supposed to be based on merit only.
Netherlands has a feminism society. A balance between life and work is maintained and decisions at workplace are made by engagement and agreement by the employer and his employee. Managers support their staff and seek consensus. Negotiation and compromise are the main methods of conflict resolutions, often characterized by long discussions till a consensus is reached.
There is low uncertainty avoidance in Netherlands. The Netherland society displays a high long-term orientation. People here portray ability to easily adapt traditions to changed conditions, a strong propensity to save and invest thriftiness and perseverance in achieving results (Albrecht et al., 2015). Netherlands exhibit high level of indulgence. A great Importance is given to leisure, enjoying life and having fun. The people also display a high level of optimistic attributes.
Human Resource Management Practices
Recruitment
Recruitment can be simply described as the process of picking best individuals from a group of applicants for a specific job. Recruitment is the process of identifying, attracting, interviewing, selecting, hiring and onboarding employees. According to Albrecht et al. (2015), recruitment is simply resourcing of talent. Lange (2010) defines recruitment as finding and hiring the best and most qualified candidate for a job opening, in a timely and cost-effective manner
Reasons for Recruitment
Other than finding the required personnel, the following are additional reasons for recruitment:
- To make sure that there is compliance with policies and laws.
- To ascertain effective and efficient recruiting
- To establish proper alignment of skill sets to organizational goals
Factors influencing Recruitment
Size of the organization- A large company tends to conduct recruitments for in search for many employees while a small company will need only a few individuals.
Employment conditions of a country- Companies may have difficulties in finding desired labor in underdeveloped countries. The recruitment process I therefore easier and cheaper in developed countries.
Organization salary and remuneration structure- Organizations with high salary structures tend to receive very high applications when they advertise vacancies in their positions. On the contrary, this may be the opposite for companies that offer low salaries. These companies may even face challenges in recruiting top notch challenge.
Working conditions of the Organization- To keep their employees and attract new ones, companies must ensure that their employees are satisfied at their work places. Job applicants will also look at the working conditions while applying as they would want a guarantee of job security.
The Organization’s growth- Fast growing organizations will need new member now and then hence conduct constant recruitments. On the other hand, companies with slow growth will only carry out recruitment once in a while
The Recruitment Process
Different organizations have various recruitment procedures depending on their structures and needs. The following is the general recruitment process:
Identify vacancies or new positions- The first step of the entire recruitment process is to identify that you either have a vacancy that needs to be filled or that you need to create a new position and fill it (Harness 2019)
Conducting job analysis- This involves identifying, analyzing and determining the roles and activities or duties that the new employee will perform.
Job Description- This a document that provides information about the scope of job roles, responsibilities and the positioning of the job in the organization
Job Specifications- This entails the qualifications, experience, training and development and other requirements that the applicant is required to have in order to be selected.
Job evaluation- This is the process of assessing, analyzing and determining the relative value/worth of a job in relation to the other jobs in an organization. This is important for establishing how much an employee will be paid. It includes job classification job ranking and job grading.
Recruitment Strategy
After recruitment process, recruitment strategy is the next step. This entails determining whether to source for the new employees internally or externally.
- Internal sources- Refer to hiring employees within the organization through: promotions, transfers, former employees, internal advertisements (job posting), employee referrals and previous applicants.
- External Sources- Refers to hiring of staff from outside the company. It involves, direct recruitment, employment exchanges, employment agencies, advertisements, professional associations, campus recruitment and word of mouth.
- Screening or Shortlisting of applicants- This involves determining whether the applicant is best fit for the specific job and match its description by testing and evaluating their skills and personalities. This process involves the following steps;
- Review of application documents
- Conducting Initial interviews
Carrying out various tests for recruitments
- Conducting final interviews
- Selection of top candidates
Evaluation and Control
This is the last process in recruitment. It entails assessing the effectiveness and validity of the process and methods used. The entire recruitment is a very expensive process hence need for evaluation of its performance. At Unilever Indonesia, recruiting is aimed at finding the best and brightest individuals who will fit into the company and can work in teams and understand the value of cooperation and consensus (Mulyana & Djajadiningrat, 2013). Unilever Indonesia mainly conducts external recruiting. This is majorly from fresh top performing university graduates. The external source of recruitment is efficient for PT Unilever Indonesia (O’riordan, 2017). The high level of illiteracy and development give the company an easy time in recruitment and selection. Any prospective employee who wants to enter the company must go through a strict selection process. They are not just the best graduates of the best colleges. The company also provides a working training program (LATKER) to reduce the likelihood of inequitable human resources within it (Mulyana & Djajadiningrat, 2013). The Company conducts recruitment every year to obtain management trainees through rigorous selection, conducted openly to obtain the right candidate and the best for future developments.
Training and Development
Training is the process of equipping, polishing improving or upgrading skills and qualifications of an employee to meet a specific desired level. Training is entirely job oriented while Development on the other hand is psychological and aimed at improving non-technical skills. Training is a marshaled activity that aims to impart instructions or information to improve the performance, knowledge, or skills of the trainee (Saed & Asgher, 2012). Development refers is the activities that help individuals attain new knowledge or skills that are necessary for their personal growth. All-inclusive training and development programs help trainees to focus on the skills, attitudes, and knowledge that are necessary to achieve goals and to generate competitive advantages for an organization.
Reasons for Training and Development
Training and development are aimed at the following; to increase productivity and quality, promote versatility and adaptability to new methods, reduce the number of accidents, reduce labor turnover, increase job satisfaction displaying itself in lower labor turn-over and less absenteeism and to increase efficiency
Training Process
Training process entails the following;
Needs assessment- The purpose of this step is to establish whether the intended training is really necessary. It also involves determining competency or skills gaps and the appropriate training intervention required. According to Joanna (2017), the first step in training process is to determine whether a problem can be solved by training.
Development of training plan- Once the need for training has been established, a well laid plan is developed on how the training is to be undertaken.
Development of training materials- Here, the right content and the training materials are developed. This ranges from designing the appropriate environment to deciding the various tools, everything is taken care of in the development stage
Actual training- Here, the actual training is done. All the training plans and ideas from the previous steps are implemented.
Evaluation- This is the final stage of training and development- in this stage, the effectiveness of the training is analyzed and evaluated. Its success or failure is determined and considerations for future indicated (Chungyalpa & Karishma, 2016).
At Unilever Indonesia, the employees have regular one hour learning lessons to improve performance. This program is called to as ‘Solar’ by the organization, an acronym for Sharing of Learning and Results. This is an organizational based type of training that has an impact on organizational performance and quality workforce. Unilever also has internship program which is a type of training as the interns may eventually be employed in the organization.
Reward Management
A Reward is generally explained as the total financial and non-financial compensation or total remuneration that an employee is given in turn for labor or services delivered at work (Chungyalpa & Karishma, 2016). Reward management is therefore the strategies, policies and processes needed to ensure that the value of people and the contribution they make to achieving organization, departmental and team goals is recognized and rewarded (Armstrong, 2010). It is concerned with the designs, implementations and maintenance of reward and remuneration systems.
In an interview with Yasmin Taj, an editor for ‘People Matters’, Willy Saelan is the Vice President – Human Resources, PT Unilever Indonesia in 2018, willy indicated that money is not the main method for motivation and retention of employees. He noted that in addition to money, the organization considers other rewards.
Characteristics of reward management System
Reward management and people. Reward management is all about people. This is because a company is nothing else but the people in it.
Integrated reward management- it is a proposition to reward management that champions for reward policies and undertakings to be handled as a reasonable whole in which the parts contribute (Armstrong, 2010).
Objectives of Reward management
The main aims of this management are:
- To support the achievements goals of an organization
- To develop and support organizational culture
- Fairly reward people according to their value in the organization.
- To align reward mechanisms with employee needs
- To recruit and retain employees
- Strengthen psychological contract
Type of Rewards
Basic types of rewards
Extrinsic rewards- These are rewards that meet the basic needs such as survival, security pay and treatment
Intrinsic rewards- Are those that meet higher needs such as esteem and development.
Rewards by Team, Individual or Organization
Team rewards include, team bonus and rewards group cooperation. Individual rewards include benefit, base pay or incentives. Organization rewards can be shares, profit-sharing and gain-sharing.
Conclusion
In conclusion, Human Resource Management has come out to be a very important factor in organizations. No organization can work without this department. Through its practices namely, recruitment, training and development, it helps organizations to achieve their ultimate goals while leaving satisfied employees and customers at large.
Recommendation
Having seen how important Human Resource Management is to any organization an
